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The Cost of HACCP Implementation in the Seafood Industry: A Case Study of Breaded Fish
... Numerous studies have estimated food safety expenditures, particularly of HACCP systems. Estimates range from < 1 to 7% of the value of production (Nganje, 1999;Antle, 2000;Cato and Lima dos Santos, 2000;Colatore and Caswell, 2000;Nganje and Mazzocco, 2000;Hooker et al., 2002;Henson and Mitullah, 2003;Ollinger and Mueller, 2003;Henson et al., 2005;Maldonado et al., 2005). Some studies conclude that these expenditures reported by firms do not reflect 'true' cost due to the inherent difficulty in distinguishing costs related to HACCP vs. conventional production processes. ...
... Empirical analysis of this issue applied to developing countries, with limited resources and higher trade-offs between food safety and other investments, is scarce. Firm-level research in developing countries is limited to a few case studies with a focus on small producers excluded from high-value markets (Cato and Lima dos Santos, 2000;Colatore and Caswell, 2000). ...
... These figures sum to US$0.16 ⁄ kg, which is much higher than the estimated results for Philippine seafood processors. Colatore and Caswell (2000) surveyed US breaded fish processing firms and found that on average, US$113,305 are incurred as start-up HACCP costs (or US$0.001 ⁄ kg) and US$0.009 ⁄ kg maintenance costs. These figures sum to US$0.01 ⁄ kg, much lower than the estimated results for Philippine seafood processors. ...
Food safety regulations aimed at controlling food contamination have sometimes been criticised as excessive burdens, disadvantaging smaller firms and exports from developing nations. Reported food safety expenditures appear relatively small (from < 1 to 7% of the value of production) but can erode profit margins for many firms. This article responds to claims that reported firm-level expenditures do not reflect true costs of compliance with food safety systems. We estimate incidental cost savings and uncounted costs associated with Hazard Analysis and Critical Control Points (HACCP) certification among Philippine seafood producers by modelling the interactions between conventional production and food safety expenditures using translog cost functions. Results indicate a significant underestimation of reported HACCP costs by an average of US$1.10 for a dollar of reported expenditure.
... To assess the motivations or the obstacles related to the adoption of the HACCP method in the agro-food sector, many studies have been performed based on a cost/benefit analysis (Unnevehr, 2000). These studies show that the time allotted for reading of the requirements and adaptation by the developer with regard to the HACCP method is under estimated (Colatore et Caswell, 2000). These adaptation and comprehension difficulties are a priori all the more significant when the method is used to solve problems for which it was not originally developed. ...
... From this viewpoint, the development of selfdiagnostic guides used directly by the farmers is not enough to ensure this initial diagnostic. The analysis grid proposed by Colatore and Caswell (2000) therefore defines many categories of costs associated to the application of the HACCP 12 method. According to Colatore and Caswell (2000) In these studies, the development costs were evaluated according to the complexity of the HACCP plan (assessed with regard to the number of critical points) and the necessary time (in proportion to the number of critical points). ...
... The analysis grid proposed by Colatore and Caswell (2000) therefore defines many categories of costs associated to the application of the HACCP 12 method. According to Colatore and Caswell (2000) In these studies, the development costs were evaluated according to the complexity of the HACCP plan (assessed with regard to the number of critical points) and the necessary time (in proportion to the number of critical points). In the case of farming systems, an individual analysis is necessary in certain problematic situations for many reasons: i) the necessity of implementing measures and analyses on an individual basis that are very costly (soil analyses,…) depending on the size of the farming system; ii) the very existence of scientific reference materials not available on a local level; iii) the necessity for specific qualifications in the performance of an analysis and use of outside advisors. ...
This article aims to highlight the methodological bases and principles, sometimes implicit, that have served as support for the development of a referential similar to the one retained as part of the French decree on "Agriculture Raisonnée", namely the Quali'Terre referential. We show that the innovations introduced by this referential are of various natures: i) a change of perspective by taking a position at the level of the farming system and not of a given parcel of land or production, ii) use of the HACCP method for identification and most especially the prioritization of risks and the preventive measures to be implemented, iii) the introduction of the concept of continual improvement for the farmer. Even, if from an agronomic point of view, the application of this type of referential does not seem insurmountable, we show that, based on a study of about one hundred farms in Picardie, its global approach on farm management, unstead of just applying technical requirements, involves changes in farmer's practices that are more difficult than what was expected first.
... There are many incidents around the world that show the importance of feed safety in ensuring the safety of human food (COLATORE, 2001). Currently, the stock feed and livestock industries have the highest possible profile in the food supply chain, a situation that is likely to continue into the future. ...
... Implementation of a program such as HACCP can improve industrial quality through the quality control of raw materials and the industrialization steps of the food, submitting to pertinent legislation and federal inspections, as well as developing products of quality, reliable and certified, with minimal losses and reduced costs (CORADI et al., 2009;YUNG, 2006;COLATORE, 2001). Given the efficiency of application of HACCP system in the industry in general, and also the low use of the tool of quality control in feed processing units, based on the HACCP principles the objective of this work was was to identify the critical points for microbiology control in feed mill evaluating the presence of birds, rodents, insects, mites and fungi. ...
Based on the HACCP principles the objective of this work was to identify the critical points of control in a feed mill to real capacity of production at 1,000 ton day-1 , located in the southwest of Brazil. The presence of birds, rodents, insects, mites and fungi in the products, by-products, as well as internal and external areas of the industry were evaluated. The samplings of products and traps installation were the techniques utilized for the control. In addition, the receiving, pre-cleaning, drying and storage of corn, as well as dosage and mixing of feed were characterized the critical steps in the control of contamination. Furthermore, birds and rodents were the main contaminants observed during the production process, however, the high population of insects and fungal colonies found in the products meant the greatest risk of contamination to the final product. In conclusion, the use of Good Storage Practices and Manufacturing, trap installation, as well as intense cleaning and sanitation processes are immediate and efficiencies alternatives in the contamination control in feed mills.
... Value provided by only one company. In the fisheries sector, the impact of cleaning and sanitizing on the total additional costs of maintenance operations was also important (third greatest expense) (Colatore and Caswell 2000). This suggests that this type of expense will represent a significant part of the overall maintenance costs of GMP norms in other sectors of the food industry. ...
... However, for FS with a greater meal production capacity (Table 8), the greatest incremental expense with GMP norms maintenance was the activity of training and turnover of personnel ($1,334). Studies of HACCP implementation in different types of food processing plants show that laboratory analysis costs are an important item in the total system costs (Momnson ef al. 1998; Unnevehr and Jensen 1999;Colatore and Caswell 2000). In this study, the cost of laboratory analysis was the fourth greatest expense for HACCP system implementation (Table 7), and the sixth greatest expense for the HACCP maintenance (Table 9). ...
Investment in quality systems to guarantee the hygiene-sanitary safety of meals provided by foodservices has become necessary considering the constant increase in food poisoning outbreaks. This survey was carried out in 22 towns in the state of São Paulo, Brazil, using questionnaires given to managers responsible for the quality of foodservices (FS). The survey asked about adoption of Good Manufacturing Practices norms (GMP) and Hazard Analysis and Critical Control Points (HACCP) systems, and the costs of implementing and maintaining these systems. The majority of FS had still not implemented these quality systems. Nonadopters included hospitals, asylums, schools, and nurseries. The main reason for failure to adopt these quality systems was a lack of knowledge of the subject. Foodservices producing fewer meals showed the lowest levels of adoption and the highest costs of implementation of GMP norms. Despite recognizing the important role of a HACCP system in the hygiene-sanitary safety of their meals, the majority of the quality managers surveyed gave priority to quality attributes such as the nutritive value, taste, and presentation of their meals rather than to attributes related to food safety.
... In a wider perspective, all schemes are understood as quality schemes where food safety is a part of total quality (Raspor, 2008). As a result, researchers have revealed difficulties in estimating costs and allocating them to specific managements systems (Colatore and Caswell, 2000;Krieger et al., 2007). ...
... This is in concurrence with similar studies confirming difficulties in collecting and estimating costs. Most companies, although ISO 9001 certified, are not aware or do not follow PAF costs with a wide range of deployment of the concept, from a simple calculation of nonconformities or complaints to the calculation of all the categories of quality costs (Colatore and Caswell, 2000;Tarí and Sabater, 2004). ...
Quality costs represent an indicator associated with the achievement or non-achievement of quality. The objective of this study was to evaluate the values and structures of quality costs in a Serbian fruit processing company, to calculate the total quality cost index and analyse allocation of the costs related to quality and food safety. A structured survey in a selected company has been performed in order to collect data. Financial and management system documentation have been reviewed for a period of four years. A prevention-appraisal-failure quality cost model was used in determining, categorizing, processing and analysing the results. In 2008, 2009 and 2010 the quality costs were 49.66, 44.99 and 57.35 €/tonnes, respectively. During the observed period, the structure of costs changed. Prevention and failure costs increased while appraisal costs decreased. The total quality cost index increased from 1.94% in 2008 to 2.58% in year 2010. Results confirmed that the total quality cost index were within the published range of values for the food industry. The distribution of costs changes due to various factors such as additional legal and customer requirements related to food safety and quality, economic crisis and maturity of implemented management systems.
... Ehrlich and Becker (1972) define that preventive effort have for main characteristic to decrease the probability of a bad event. 1 Cho and Hooker (2007) provide a game theoretic framework that takes into account food operators which might differ in cost. They deal with the efficient regulatory instrument (voluntary or mandatory) to maintain the level of food safety in the market. ...
... They deal with the efficient regulatory instrument (voluntary or mandatory) to maintain the level of food safety in the market. Similarly, based on empirical evidence Colatore and Caswell (1999) have established that in the seafood industry food safety effort can vary by firm type. Rouvière et al. (2010) show that small firms would implement higher safety effort than large firms in the French fresh produce imports industry. ...
The European General Food Law of 2005 and the newly promulgated FDA Food Safety Modernization Act (FFSMA) of 2010 ask all food operators to implement preventive efforts. In this article, we explore the link between firm’s size and preventive efforts. We show two main results. First, when there is no cross-contamination, small firms will provide higher preventive efforts than large firms. When there is crosscontamination, the effort-size curve may have a "inverted-U" shape. From our results we can argue that when implementing or enforcing food safety regulations, public authorities should consider both firms size and food safety hazard.
... The coefficient X P 3 was introduced in expression (3) to contemplate hygiene labour costs. In the food industry, studies have shown that hygiene and sanitation costs can be up to 20% of total labour costs (Colatore & Caswell, 2000;Golan et al., 2000). Coefficient z (decimal) accounts for the relationship between the labour included in hygiene and the sanitation activities and total hygiene and sanitation cost. ...
... Coefficient X P 5 is estimated as a variable percentage of labour costs. It can be estimated as 5-10% of direct labour costs in food processing plants (Colatore & Caswell, 2000, Golan et al., 2000. ...
A HACCP-based system is a recognized food safety management program aiming at the control of all the factors affecting food safety. It is also possible to add factors related to food quality. To evaluate the effectiveness of a quality system, a realistic estimate of quality costs is essential. The purpose of this work is to develop a mathematical model for the calculation of the costs associated with a specific quality level due to HACCP-based system implementation. Experimental results obtained at Argentinean hake freezing plants (Merluccius hubbsi) are presented and compared with those calculated with the proposed model. The proportion of variance explained by the model was 0.903 for total quality costs; proving its optimum performance.
... Belzer (2000) also remarks that the estimate, based on a sample of 9 establishments, maybe too small to represent the industry as a whole. Colatore and Caswell (2000) performed an ex post estimate of the costs of HACCP in the breaded fish industry, and concluded that ex ante estimates are usually underestimated due to the diversity of HACCP applications. The study of Antle (2000) provides an estimate of the increase in variable cost of production, which ranges from $535 million to $4.8 billion, with the upper limit being four times as high as the FSIS estimate. ...
Australasian Agribusiness Perspectives
Vol 2004, Paper 64
ISSN 1442-6951
... The additional cost of compliance with FSM followed method similar to Boehlje and Eidman (1984). Colatore and Caswell (2000) also used an accounting approach to assess the adoption costs of HACCP for fish producers in Massachusetts, United States. ...
One way to ensure food safety is by enhancing compliance at the farm level. This study investigates the status, estimates the cost, identifies the determinants, and assesses the impact of compliance with food safety measures (FSM) in milk production in Nepal. The study is based on primary data collected from six high milk producing districts that captures the geographical and institutional diversity of milk production. Results show that the status of farm level compliance with FSM is not very encouraging. Also, the intensity of adoption of FSM exhibits significant inter- and intra-district variations. It varies positively with herd size but the additional cost of compliance with FSM varies negatively with herd size. Among other determinants, access to information, and incidence of inspection for conformity with safety and quality standards are also associated with higher adoption of FSM. Finally, we also estimate the impact of FSM on farm-gate prices and farmers’ profits and conduct several robustness checks.
... The additional cost of complying with the food safety measures was estimated in a similar fashion to that used by Boehlje and Eidman (1984). Colatore and Caswell (2000) also used the accounting approach to assess the adoption costs of the Hazard Analysis and Critical Control Point (HACCP) approach used by fish producers in Massachusetts. ...
... Hardie, et al. [19] mentioned that relatively low level of innovation exhibited by practitioners is generally considered a weakness. Colatore and Caswell [20] reported that Hazard Analysis and Critical Control Point (HACCP) could be a good strength for food industry and by using SWOT analysis the HACCP implementation cost could be reduced. SWOT Analysis can be employed to the totality of a specific market's enterprises as a cohesive frame facilitating the processes of reaching conclusions, making decisions and shaping business policy [21]. ...
... Maldonado et al. (2005) concluded that for the Mexican meat industry, investment in new equipment and microbiological tests of products accounted for most of the implementation and operational costs, respectively. Calatore and Caswell (1999) reported from studies in the seafood industry that many companies failed to have a reliable costs and benefits estimation of HACCP implementation beforehand. They concluded that the uncertainty on costs and benefits estimations could be a major restrain for planning HACCP adoption by individual seafood companies. ...
... Governments across the world are increasingly mandating the use of Hazard Analysis and Critical Control Points (HACCP) approaches to assuring food safety [5]. But in Turkey, this concept has not become legally compulsory yet. ...
Food quality has become a considerable issue in food sector over the past decade. Since the food safety concepts has been paid attention in the developed countries. It is obviously clear that keeping the competition power can be provided by the way of producing quality products. In the de-veloping countries, food quality problems may prevent international trade because of increasing food quality regulations. The aim of this study is to determine the problems which the firms in the Medi-terranean region in Turkey faced with as applying HACCP, to examine the expenses of the HACCP implementation in food firms, to determine the economic and social advantage of HACCP and con-scious level of the firms about HACCP. The firms applying HACCP tend to export to the EU coun-tries; employ more qualified personnel; and in these firms the managers are not generally the owner of the companies. The most important cost category consists of building, ground and the arrange-ment of the surroundings. This cost category is occurred because that the HACCP system requiring rearrangement or establishment of this firms. The most important problem as establishing and ap-plying HACCP system is deficiency of training about HACCP.
... Empirical studies carried out to find reasons for and against the adoption of HACCP metasystem in a firm, where the majority were focused on food industries in the developed countries, have asserted that implementation of a HACCP metasystem is not only maximizes safety and quality of food products but is also gain an acceptance and competitiveness in the local and international markets and increases the technical and human resource efficiency of food processing firms (see, for example Antle, 2000;Bas et. al., 2007;Calatore and Caswell, 1999;Henson and Holt, 2000;Maldonado et al., 2005). ...
In the current world context, there exists an increasing demand for, and pressure created by various local (both private & public) and international institutions to ensure, higher standard of food safety and quality. There is no exception for tea industry in Sri Lanka, as the factories operate in this sector is required to adopt a food safety management metasystem of Hazard Analysis and Critical Control Points (HACCP).
The purpose of this article is to share some information with regard to experiences of “first movers” of adoption of HACCP in tea processing factories in Sri Lanka. It will specifically focus on the questions of what benefits and costs a factory expects and what constraints that it faces with respect to its decision towards adoption of HACCP. The empirical analysis comprised of two phases. In Phase I, a series of case studies (n = 8) were carried out tea processing factories, where each firm was selected to represent a unique stage of adoption of HACCP. This information was used to develop a structured questionnaire comprised of comprehensive and objective lists of benefits, costs and constraints. In Phase II, the questionnaire was administered by means of face-to-face interviews with top managers from 33 tea processing factories. Both qualitative and quantitative data analysis techniques, including the Factor and Cluster Analysis were employed to analyze data.
The results show that a majority of first-movers had implemented the HACCP by expecting a low level of waste production in the firm and a quality final product. Firms did not, however, expect a higher price or to reduce existing costs by adopting it. The Factor and Cluster Analysis based on the benefits confirmed
that firms’ action on HACCP was primarily motivated by its ability to increase firms’ human resource (35%) and technical (25%) efficiency and increase profits through better marketing of the product (13%). More than 50% of firms considered training of both supervisory and production staff on various aspects related to HACCP system as the highest cost incurred. Costs associated with record keeping and hiring of consultants were also remarkable. The outcome of Factor and Cluster Analysis show that the monetary problems (36%), internal environment (33%) and attitudes of employees (9%) were the major constraints. The information generated by the analysis will be helpful for the factories that are acting on HACCP at the moment, since they can formulate their HACCP plans with care to obtain a better margin between those benefits and costs.
... These are indirect impacts of HACCP implementation in accordance with the results found by Jensen and Unnevehr (1998). Others studies also demonstrated that HACCP implementation promotes dual safety/non-safety firm-level benefits (Colatore & Caswell, 1998;Hooker, 2000). ...
This paper is aimed to show in a quantitative way the tech-economic advantages of applying a HACCP-based system in fish processing plants with a focus on the quality costs methodology. Quality costs before and after HACCP implementation at three fish processing plants located in Latin America are analyzed. The problems encountered and the resulting benefits are also described. Some of the findings demonstrate that a HACCP-based system implementation reduces failure costs, improves quality, and allows for better knowledge of production planning and control, showing that in the first years of HACCP implementation, when failure costs are over 80% of TQC, each dollar expended in controllable costs returns more than two dollars in failure savings.
... On the other hand, this approach may require large and expensive surveys when a large variability of plant technology exists and it does not provide any assessment of the impact of regulation on firm efficiency. Notwithstanding these drawbacks, several examples of application of the accounting approach to the estimation of costs of compliance to different norms and regulations have been recently published with reference to HACCP (Zugarramurdi et al., 2000; Cato & Dos Santos, 2000; Colatore & Caswell, 2000; Nganje & Mazzocco, 2000), ISO 9002 (Canavari & Spadoni, 2003) and traceability (Mora & Menozzi, 2002). In contrast to the costs, at the firm level the assessment of benefits of compliance has often been carried out in a qualitative way. ...
A Hazard Analysis and Critical Control Point (HACCP) Program was introduced as a mandatory measure in the EU in the 1990s. Despite its impact on the food industry, only limited literature addresses the issue of cost and benefits of HACCP at the firm level in Europe. This paper illustrates the results of a pilot study on case studies in Italy, UK and The Netherlands, providing a first assessment of the order of magnitude of costs of compliance and a qualitative illustration of the main benefits perceived by producers.
... For new equipment, the transactions cost of the validation is high, because operators and managers are using technical assistance in order to become familiar with operational parameters of the new equipment. In part, the technology validation of a new installation is closely intertwined with training costs, which have been found to be important elements determining the cost efficiency of food safety protocols (Colatore and Caswell, 2000). High levels of scientific expertise are required to validate the effectiveness of pasteurization facilities in achieving pathogen reduction for salmonella. ...
The Almond Board of California proposed to require that all almonds shipped from California handlers be treated to achieve a 4-log reduction in the pathogen that leads to salmonellosis. The Assurance program is expected to add several million dollars to transactions costs in the almond marketing system. There is a wide range in these cost estimates, mainly because of the difficulty in predicting how many firms will be interested in applying for the program.
... for HACCP plan design, control and record keeping procedures, sanitation procedures, and training of employees ( Colatore and Caswell 2000). The FDA has acknowledged that the introduction of HACCP has proven to be complex, as many elements were largely unfamiliar to processors, in particular those in major exporting countries. ...
The United States mandated a Hazard Analysis Critical Control Points (HACCP) food safety standard for seafood in 1997. Panel
model results for 1990 to 2004 suggest that HACCP introduction had a negative and significant impact on overall imports from
the top thirty-three suppliers. While the effect for developed countries was positive, the negative effect for developing
countries supports the view of “standards as barriers” versus “standards as catalysts.” A different perspective emerges from
individual country-level analysis. Regardless of development status, leading seafood exporters generally experienced a positive
HACCP effect, while most other smaller trading partners faced a negative effect.
... See Colatore and Caswell (1999),Zaibet and Bredahl (1997) andUnnevehr (1999).For example,Colatore and Caswell (1999) show that for eight breaded fish companies the costs adoption of a mandatory HACCP raises the annual total costs of only 0.25%. ...
The recent food scares have been the motivation for voluntary programmes on food safety being promoted by public authorities and voluntarily implemented by food operators. In this article, we take into account the nature of the contamination risk to investigate the complementarities between private and public mechanisms for those voluntary systems to be implemented by a firm. We show two main results. First, when the firm directly markets its products to consumers a strong mandatory threat is a sufficient condition to implement voluntary systems whatever the risk of contamination. In contrast, when the mandatory threat is weak voluntary systems should be more implemented in industries where the risk of food contamination is low (pesticide residue) than in industries where the risk of contamination is high (pathogenic contamination). Second, when the risk of food contamination is low and the firm is embedded in a supply chain where the retailer can impose its own safety system, a well-designed penalty contract will induce a voluntary implementation whatever the mandatory threat.
... Nevertheless, cost and time for full HACCP implementation vary widely in food processing enterprises (Martin and Anderson, 1999). On the other side, studies reported that many enterprises may not have reliable costs and benefits estimation of HACCP implementation beforehand and it could be major restrain for planning HACCP (Calatore and Caswell, 1999). Thus, essential information is necessary to evaluate concretely the magnitude of costs in each type of plant prior to adoption (Maldonado et al., 2005). ...
Hazard Analysis and Critical Control Point (HACCP) is a safety and quality management tool used as major issue in international
and domestic trade in food industry. However, detailed information on costs and benefits of HACCP implementation is needed
to provide appropriate advice to food processing plants. This paper reports on the perceptions of costs and benefits by the
Mexican poultry processing plants and sale destinations. The results suggest that the major costs of implementing and operating
HACCP within poultry processing plants are record keeping and external technical advice. The main benefit indicated by the
majority of processing plants is a reduction in microbial counts. Over 39% of poultry production is sent to nation-wide chains
of supermarkets, and less than 13% is sent to international markets. It was concluded that the adoption of HACCP by the Mexican
poultry processing sector is based on the concern to increase and keep the domestic market, rather than to compete in the
international market.
... This type of approach has also been used in several recent studies of HACCP implementation (e.g. Cato and Lima dos Santos, 1998;Colatore and Caswell, 1999). In this approach, the effects of regulations on plant labor requirements and capital stock are identified and calculated, without estimating a parametric representation of the cost function. ...
This chapter addresses the analysis of markets for food products that are differentiated by safety characteristics. The first part of the paper surveys the broad array of issues that are involved in food safety and the regulations that have been devised to address them. The next sections of the paper consider the analysis of the demand and supply of safety-differentiated products and the implications of alternative information regimes for market equilibrium. The final section of the paper considers the measurement of benefits and costs of food safety regulations in the context of recent efforts at regulatory impact assessment.
... However, in the long term, this implementation might be the only way to keep plants as suppliers to the food market. Calatore and Caswell (1999) reported from studies in the seafood industry that many companies failed to have a reliable costs and benefits estimation of HACCP implementation beforehand. These authors explained this failure based on indirect costs not defined in the US Food and Drug Administration (FDA) protocol as well as on specific requirements raised from their own business deals. ...
This paper reports the levels of HACCP implementation, costs of implementation and operation, and benefits of implementation for the Mexican meat industry. One hundred and sixty Federal Inspection Type (TIF) enterprises were surveyed, with a 58% response rate. Only 18% of the TIF enterprises interviewed had totally adopted HACCP, while 20% did not have an interest in adoption. The norm of ISO 9000 appeared to be an intermediate step in HACCP implementation. The results show that investment in new equipment and microbiological tests of products accounted for most of the implementation and operational costs, respectively. The main benefit reported was reduction in microbial counts, while staff training was reported as a significant problem. The study shows that although the level of total HACCP implementation is not high, HACCP has implications for both the domestic and international markets.
... The FDA and the FSIS estimated the costs of mandatory HACCP regulations for their Regulatory Impact Assessments using an accounting approach (FDA, 1994;FSIS, 1996). This type of approach has also been used in several recent studies of HACCP implementation (e.g., Cato and Santos, 1998;Colatore and Caswell, 1998). In this approach, the effects of regulations on plant labor requirements and capital stock are identified and calculated, without estimating a parametric representation of the cost function. ...
This paper begins with a review of the concepts and methods that can be used to quantify the benefits and costs of food safety regulations. On the cost side, where research is only beginning to emerge, this paper also provides an analytical framework for measurement of the costs of statutory regulations in the form of design and performance standards. This paper also discusses the use and limitations of currently available benefit and cost information for quantitative regulatory impact assessment, using the assessment of the mandatory HACCP and pathogen reduction regulations in the United States as an example. The paper concludes with suggestions for future research on quantifying benefits and costs of food safety regulations.
... Since the emergence of HACCP as a food safety management system and especially after the mandate of HACCP implementation in some significant markets such as the USA, there have been studies considering the implementation process and the impacts, as well as costs and benefits of this implementation on food businesses. Significant studies using survey as an approach to analyse the process of HACCP implementation such as those of Martin and Anderson (2000), Colatore and Caswell (2000), Mortlock et al (2000, Buchweitz and Salay (2000), Nganje and Mozzocco (2000), Siebert et al (2000), and Henson et al (2000 have revealed the international experiences regarding the adoption of HACCP. Our study employed a similar approach to the above-mentioned studies, in which a survey is conducted to gather information regarding firms' experiences with the process of HACCP implementation. ...
In New Zealand, the Animal Products Act 1999 requires that all animal product primary processing businesses must have a risk management programme (RMP) based on the principles of Hazards Analysis and Critical Control Point (HACCP). However, due to market access requirements, many primary food exporters have voluntarily adopted HACCP systems for food safety management since the 1990s. This paper studies the process of HACCP/RMP adoption and the transition from voluntary HACCP to mandatory RMP in New Zealand Meat Industry. The main issues explored are plants' motivations, implementation problems, costs and benefits associated with the implementation of HACCP/RMP. The paper concludes with implications for policy design and further research.
... See Colatore and Caswell (1999),Zaibet and Bredahl (1997) andUnnevehr (1999).For example,Colatore and Caswell (1999) show that for eight breaded fish companies the costs adoption of a mandatory HACCP raises the annual total costs of only 0.25%. ...
Food safety economists have raised numerous questions according to the emergence and the multiplication of safety quality management system within the food supply chain. However, few research deal with the voluntary implementation by firms of these systems (Segerson, 1999; Venturini, 2003; Noelke- Caswell, 2000). Our paper aims to develop a unified analytical framework of these research. We obtain three results. First, in a market model when the mandatory threat is strong, the voluntary adoption of safety measures is an equilibrium without need of the cost differential assumption (Segerson, 1999) nor of a reputation effect (Venturini, 2003). Second, when the mandatory threat is weak the reputation effect and the rule of liability could induce the voluntary adoption on different extent depending on the situation of safety contamination. Third, in a supply chain model we introduce a retailer and show that a well designed contract offered by the retailer induce upstream firms to voluntarily implement safety measures. Private incentives are thus very powerful and can be used as the sole mechanism to implement the efficient system.
... The main advantage of this methodology is its simplicity, due to the nature of required data, usually easily found at the plant level. Several examples of application of accounting approach to the estimation of costs of compliance to different norms and regulations have been recently proposed, namely with reference to HACCP (Zugarramurdi et al., 2000; Cato and Dos Santos, 2000; Colatore and Caswell, 2000), ISO 9002 (Canavari and Spadoni, 2003) and traceability (Mora e Menozzi, 1999). However, the accounting approach presents a major constraint in extending sample results to the universe due to the large variability of plant typologies and does not allow the assessment of the effects on the overall efficiency of the firm. ...
The rise of managed healthcare organizations (MCOs) and the associated increased integration among providers has transformed US healthcare and at the same time raised antitrust concern. This paper examines how competition among MCOs affects the efficiency gains of improved price coordination achieved through integration. MCOs offer differentiated services and contract with specialized and complementary upstream providers to supply these services. We identify strategic pricing equilibria under three different market structures: overlapping upstream physician-hospital alliances, upstream-downstream arrangements such as Preferred Provider Organizations, and vertically integrated Health Maintenance Organizations. The efficiency gains achieved depend not only on organizational form but also on the toughness of premium competition. We show that, contrary to popular thinking, providers and insurers do not earn maximum net revenue when they are monopolies or monopsonies, but rather at an intermediate level of market power. Furthermore, closer integration of upstream and downstream providers does not necessarily increase net revenues.
... A relatively large number of previous studies use "benefit-cost analysis" to examine the overall gains to different food sectors from adopting certain food safety and quality metasystems, in particular HACCP. This literature has explored the adoption of HACCP in the US red meat and poultry processing sector (see for example Ollinger and Mueller, 2003;Golan et al., 2000;Antle, 2000;Jenson and Unnevehr, 1999;Calatore and Caswell, 1999;Crutchfield et al., 1997), as well as other food sectors in the US and other countries (see for example Cato and Lima dos Santos, 2000 on the frozen shrimp industry in Bangladesh and Zaibet, 2000 on the Oman fish industry). Whilst the majority of these papers predict net gains to the sectors examined, they suggest that smaller firms typically achieve lower benefits and accrued higher costs, for example in the adoption of HACCP. ...
The possibility of measuring and comparing sustainability performance is generally taken for granted in management studies and practices based on the evaluation, selection and ranking of the supposedly best companies in the field. The purpose of this article is to question this basic assumption by analyzing the comparability of sustainability performance through a systematic review of 12 mining company reports using Global Reporting Initiative (GRI) guidelines. The analysis of information based on 92 GRI indicators raises serious questions concerning the hypothesis of measurability and comparability of sustainability performance, drawing attention to the main reasons that make it very difficult if not impossible to establish a credible and justifiable classification among organizations.
La possibilité de mesurer et de comparer les performances de développement durable est généralement prise pour acquise tant dans les recherches en gestion que dans les pratiques de classement ou de sélection des meilleures entreprises dans ce domaine. L’objectif de cet article est d’examiner cette hypothèse de mesurabilité et de comparabilité des performances de développement durable à partir de l’étude systématique de 12 rapports d’entreprises minières utilisant le même guideline du Global Reporting Initiative (GRI). L’analyse des informations relatives aux 92 indicateurs du GRI utilisés remet en cause l’hypothèse de comparabilité des performances de développement durable en mettant en lumière les principales raisons qui rendent pratiquement impossible l’établissement d’un classement crédible et justifiable entre les entreprises.
Food safety crises have led governments to increase food firms’ responsibility by asking them to voluntarily implement prevention efforts. In this article, we explore the relationship between food firms’ size and their level of prevention efforts. We show that when cross-contamination between units is unlikely, small firms undertake greater prevention efforts than large firms. But when cross-contamination between units is possible, the effort-size curve is an inverted U-shape. Using these results, we discuss food safety laws in Europe and in the US, which differ in how they deal with the size of food firms’ operations.
Regulations designed to reduce the risk of E. Coli 0157 food poisoning are examined in this chapter. These regulations are somewhat unusual in that they have been the subject of several ex post analyses. The evidence suggests that the ex ante costs were underestimated because of incorrect assumptions that (a) the regulations would not impose any one-off implementation costs on business, and (b) that the costs to Local Authorities of administering the licensing scheme would be largely offset by license fee revenue. The study highlights the difficulties of attributing costs to specific regulatory measures. It also raises questions about the ways in which time spent complying with regulations is measured and valued. © Michael MacLeod, Paul Ekins, Robin Vanner and Dominic Moran 2009. All rights reserved.
The aim of this article is to orient economists new to the issue of food safety. It provides an overview of the scope of current food safety problems and the food safety policy reforms being adopted to address them around the world. Current efforts to modernize food safety policy are being shaped by several larger trends: globalization, use of risk analysis and cost-benefit analysis in public administration, and total quality management regimes in industry. Then, this article briefly examines two major roles that public economics can play in food safety policy: better informing policymakers about the social benefits and costs of their decisions and strengthening risk assessment. It reviews a rather coherent set of policy reforms that are being adopted worldwide to modernize food safety policy and shows that it will be a challenge for economists to make certain that their insights are heard and their relevance understood.
The objective of this study was to determine by interviews the level of adoption of Hazard Analysis and Critical Control Point (HACCP) and ISO 9000 among Mexican Federal Inspection Type slaughterhouses. Among 39 slaughterhouses interviewed in 1999, only 18% had implemented HACCP, 57% were implementing or planning to adopt it, while remaining 25% showed no interest in implementation. Exporting slaughterhouses which supply to specific domestic niche markets first implemented HACCP. The major costs reported to HACCP adoption were staff time required to document the system and laboratory microbiology product testing, whilst reduced microbial counts in products was the most important benefit. Adoption of ISO 9000 in some of these Mexican slaughterhouses was a preliminary step and registered even lower rate of adoption than HACCP. Slaughterhouses with HACCP and ISO 9000 were located at the North border, where higher exporting trade activities take place. It may be concluded that the majority of the Mexican Federal Inspection Type slaughterhouses could not access to foreign trade nor to niches of domestic markets with high quality demands, because in the near future they will not have quality and safety systems operating.
The introduction of Hazard Analysis and Critical Control Point (HACCP)-based regulations has changed drastically the way equivalence between countries is assessed and how compliance of fish and fish products to safety regulations is determined in international trade. This paper reviews briefly the provisions regarding equivalence and compliance of current European Union (EU) and USA HACCP-based regulations for fish and fish products. The EU and USA account for around 50% of the total demand in international fish markets, and both have mandatory HACCP-based regulations that include imported products. The paper also discusses briefly the relationship of current HACCP regulations with the GATT Agreements and the FAO/WHO Codex Alimentarius Commission documents, and the possible way HACCP regulations could evolve. The paper discusses in particular the need for the introduction of quantitative risk assessment, or some indirect way of assessing risk, and therefore the effectiveness of the HACCP system, for instance through the introduction of Food Safety Objectives (FSOs). “Performance standards”, included in the USA HACCP-based regulation for meat and poultry, as the first regulatory example of an FSO is discussed. The paper in particular underlines the fact that equivalence and compliance can be achieved only through the application of proper fish processing and control.
This report examines the impact of process regulations mandated under the Pathogen Reduction/Hazard Analysis and Critical Control Point (PR/HACCP) rule by the Food Safety and Inspection Service of USDA on food safety process control. The current level of food safety found in U.S. meat and poultry food products is a result of process and performance regulations and management-determined actions brought about by market incentives. Processing regulations include sanitation and other tasks related to food safety; management-determined actions include capital investment and other actions independent of process regulations, but possibly driven by performance standards. Performance standards—regulations that allow manufacturers to reach an acceptable level of food safety in any manner they see fit—are not a subject of this report. This study used the share of samples testing positive for Salmonella spp. as a measure of food safety process control in meat and poultry processing plants and found empirically that management-determined actions account for about two-thirds of the reduction in samples testing positive for Salmonella spp., while process regulations account for about a third of the reduction. The importance of process regulation varies, but accounts for 50 percent or more of process control in about a quarter of plants, and in some plants accounts for the entire process control system.
The objective of this study was to determine by interviews the level of adoption of Hazard Analysis and Critical Control Point (HACCP) and ISO 9000 among Mexican Federal Inspection Type slaughterhouses. Among 39 slaughterhouses inter- viewed in 1999, only 18% had implemented HACCP, 57% were implementing or planning to adopt it, while remaining 25% showed no interest in implementation. Exporting slaugh- terhouses which supply to specific domestic niche markets first implemented HACCP. The major costs reported to HACCP adoption were staff time required to document the system and laboratory microbiology product testing, whilst re- duced microbial counts in products was the most important benefit. Adoption of ISO 9000 in some of these Mexican slaughterhouses was a preliminary step and registered even lower rate of adoption than HACCP. Slaughterhouses with HACCP and ISO 9000 were located at the North border, where higher exporting trade activities take place. It may be concluded that the majority of the Mexican Federal Inspection Type slaughterhouses could not access to foreign trade nor to niches of domestic markets with high quality demands, be- cause in the near future they will not have quality and safety systems operating.
The increasing attention of consumer to the issue of food safety has led European Union to regard the achievement of high standards of security and quality as a strategic priority for the agrifood system. The whole chain of production is therefore called for a careful and continuous innovation that grants, in addition to commercial needs, respect to European regulations and national laws that imposed to safeguard public health. So, the question of food quality and security has become a priority also in the fisheries sector and this research focuses on economic issues related to the introduction of these policies in the Wholesale Fish Market in Milan. The work intends primarily to monitor the flow of products through the market of Milan, studying their amounts in terms of sales, variety of species and method of production. Then, the economic and organizational aspects of the haccp System are analyzed. The study consequently develops in two stages: the first phase identifies the trade and management peculiarities of the companies operating in the market, the second focuses on protocols and methods applied to ensure the fish products safety and the costs necessary for their implementation. Through data collected from wholesalers referring to the period 2005-2006, the study reports origin and type of products in term of purchases and sales of fished and farmed supplies. Information on retailers were then collected through a questionnaire, allowing them to be classified by size considering the quantity and type of products traded, the number of employees, turnover, customers treated and location of suppliers. Finally profit and loss accounts of the companies has been studied, pinpointing the various items of cost in order to estimate those related to the haccp System application. The standards for food safety applied by the operators in distribution platforms such as the Fish Market in Milan, may provide competitive advantage to those able to exploit the system of documentation involved. Indeed, the implementation costs seem low in comparison with the help which haccp and its traceability system could bring into business management. In a reality made up of many small farms like the one analyzed, introducing new laws creates often pratical and economic problems; for this reason the eu regulations should be interpreted as useful protocols for security and quality management, rather than a list of prescriptions.
This paper employs firm level benefit-cost and supply chain analyses to explore the reasons why a majority of Philippine seafood processing firms discontinued EU HACCP between 2004 and 2005. Results indicate that only 38% of firms remained certified, as they gained significantly from retention of EU markets, gained access to US markets, captured new buyers, and reduced product wastage. However, 62% of the initially certified firms abandoned certification, as they did not realize most of the anticipated benefits from certification and continuing certification was not economically viable. Delisting by some processors led to profit losses among their raw fish and input suppliers amounting to $4-6 million per year, representing approximately 6-9% of the value of Philippine seafood exports to the EU and mainly affecting small aquaculture fish suppliers.
The current level of food safety found in U.S. meat and poultry products is a result of both government regulations and management-determined actions motivated by market incentives. For meat and poultry processing plants, the U.S. government mandates both food and safety process regulations that require specific technologies or production practices and performance regulations that promulgate acceptable levels of food product safety. Meat and poultry processing plants are also influenced by market incentives, including legal liability, the value of their brand, and their desire to sell more of their food product. Companies often negotiate contracts, which, in exchange for higher prices or guaranteed purchases, specify food safety levels to be achieved or technologies to be used.
Implementation of a hazard analysis critical control point (HACCP) system by a Chinese poultry processing company required
significant initial investments and greater monthly operation costs, including measures needed to meet prerequisite standard
sanitary operating practices. HACCP benefits perceived by managers were diverse and difficult to ascertain—access to export
markets seems to be the chief benefit. Large-scale, export-oriented plants appear to be able to bear the costs of HACCP implementation,
but costs may be a greater barrier for smaller Chinese companies serving the domestic market.
With increased focus on food safety and protection, the Food & Drug Administration (FDA) has examined the possibility of removing the exemption for elevators pertaining to Good Manufacturing Practices (GMPs). The objective of this thesis was to determine the extent to which Kansas Elevators have adopted GMPs. To accomplish the objective of this thesis, information from an online survey completed by 42 elevators was summarized and analyzed. The information that was collected focused on the general classification of the elevators, grain safety programs, pest control programs and procedures, operational methods and personal practices, and maintenance of the facilities and equipment. Correlation coefficients were computed to determine if there were any significant correlations between elevator characteristics and GMPs. The study found that many of the elevators surveyed do not comply with the GMP requirements, and would require more resources in order to do so. Little connection was made between classification information such as size, location, or number of employees and GMP implementation. The significant correlations found were between HACCP and Pest Management, and HACCP and Traceability. The main limitation of this thesis was the small number of survey participants. Master of Agribusiness Masters Department of Agricultural Economics Michael R. Langemeier
International trade in food products has expanded rapidly in recent years. This paper presents economic approaches for analyzing the effects on trade in food products of the food safety requirements of governments and private buyers. Important economic incentives for companies to provide improved food safety arise from (1) public incentives such as ex ante requirements for sale of a product with sufficient quality and ex post penalties (liability) for sale of products with deficient quality, and (2) private incentives for producing quality such as internal performance goals (self-regulation) and the external (certification) requirements of buyers. The World Trade Organization's Sanitary Phytosanitary Agreement facilitates scrutiny of the benefits and costs of country-level regulatory programs and encourages regulatory rapprochement on food safety issues. Economists can help guide risk management decisions by providing estimates of the benefits and costs of programs to improve food safety and by analyzing their effect on trade in food products.
A critical assessment of voluntary approaches in regulatory programs is presented. When accounting for heterogeneous firms, with varying effectiveness of risk control, the optimality of a lump-sum financial incentive to encourage voluntary adoption is questioned. The paper uses a game-theoretic model to characterize the strategies of a regulator and firms. Using robust comparative statics, it can be shown that less efficient firms are less likely to participate in a voluntary food safety program. Adverse selection leads to lower overall risk control, suggesting mandatory control may be preferred.
Current policies designed to improve food safety rely on regulation and market incentives. However, the mix of both private and public incentives to improve food safety and the dynamics of industry response to regulation make analysis of the costs of food safety complex. The paper provides an overview of costs of food safety regulation and control in recent literature for both pesticide and microbial controls and draws lessons for identifying cost-effective food safety approaches. Four lessons emerge concerning industry compliance costs. First, the distribution of costs is likely to be more important than market price effects. Second, regulation has an impact on long-run incentives to invest in new technologies or inputs and therefore may bias the nature of productivity growth. Third, an analysis of costs informs the choice among regulatory alternatives; allowing market adjustments to mitigate costs and improving upon existing market incentives is likely to be the most effective ways to reach public health goals. And fourth, a risk-based systems approach can be the best way to understand the costs, incentives, and risk outcomes resulting from alternative interventions. However this approach is made difficult by patchwork regulatory authority across the food chain and lack of data required for risk assessment.
The likelihood of the voluntary adoption of hazard analysis and critical control point (HACCP) among food processing firms is evaluated by exploring the perceptions of food safety managers with respect to a range of possible motivating factors including the exogenous pressure to adopt HACCP, efficacy of existing food safety controls, perception that HACCP will improve the firm's food safety controls, relative costs and benefits of HACCP implementation, impact of HACCP on business performance, and the nature of barriers to implementing HACCP. While market-based factors exert substantial pressure on firms to adopt HACCP, many food safety managers perceive that their existing food safety controls are adequate to meet existing food safety demands. While good manufacturing practice (GMP) and traceability are considered the most efficacious food safety controls, HACCP is most often perceived to provide intangible and “incidental” benefits that are often not recognized by food safety managers a priori. An important barrier to the voluntary adoption of HACCP is the perceived questionable appropriateness of HACCP for enhancing food safety controls, while financial constraints can be an absolute barrier to implementation. The results suggest a number of potential strategies through which the implementation of HACCP might be facilitated and enhanced through cooperation and coordination between regulators and industry organizations.
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